U.S. Stocks Set To Open Higher As Optimism Prevails

Traders Hope For Recovery As Economies Continue To Reopen

S&P 500 futures are gaining about 1% in premarket trading as traders believe that the index will be able to settle firmly above the 3000 level and continue the current upside trend.

Yesterday, stocks experienced some pressure closer to the end of the trading day, and NASDAQ almost lost all the gains that it made at the beginning of the trading session. However, this sell-off did not turn into something more serious, and the market is in a good mood again.

The economic activity in the world continues to increase, and the hard-hit services sector sees some light at the end of the tunnel as more countries plan to open their borders for tourism.

While cross-border tourism is out of question for the leaders in the number of coronavirus cases like U.S., Brazil or Russia, Europeans will soon have a chance to travel to some of their favorite holiday destinations, increasing demand for energy and services.

EU Is Set To Present A Post-Coronavirus Recovery Plan

EU plans to distribute 500 billion euros in grants and 250 billion euros in loans to help its members recover from the coronavirus crisis.

This is a much-needed boost for the European economy as it faces a very tough year. Today, the European Central Bank President Christine Lagarde stated that the euro zone economy would shrink by 8 – 12% in 2020 due to the negative impact of the coronavirus pandemic.

The news of the EU recovery plan provided support to markets around the world since EU is heavily involved in trade and the improvement in its economy will benefit multinational companies.

Hong Kong Tensions Continue To Increase

At this point, the market completely ignores the rapid deterioration of the U.S. – China relations but the situation may change as China continues to press for the new legislation in Hong Kong.

On Wednesday, Hong Kong police arrested 300 protesters as tensions increased ahead of the vote for the new law which will further curb Hong Kong’s freedoms.

The U.S. has already promised to react, and the market awaits for the details of the U.S. response. In my opinion, stocks may experience a sell-off in case China announces significant counter-measures, while the U.S. sanctions alone may not be a sufficient catalyst for a correction.

For a look at all of today’s economic events, check out our economic calendar.